Readers' comments

To a large extent it is a matter of how you tell it. Usually it is very well possible to bring it as a commitment to responsible government. In some cases - like Greece now - governments simply don't have a choice and if the voters punish the incumbents it will be more a condemnation of HOW they did the cuts.

Political expediency of cuts is certainly an important question for the next decade(s). But how are budget cuts usually implemented? And for actions that fall under the amorphous term "cut", can expediency depend on the nature of the what's being cut?

Category 1) Sale of state assets. This includes privatizations of all form; PFI arrangements; selling off tracts of student debt; selling the future receipts from defined income streams. It's tempting to see such actions as window dressing - mere smudging of the balance sheet to avoid higher bond issues. But this works - sapping the market's deluge with treasury bonds does raise investor confidence. Since the public are almost completely unaffected by such measures (in the short term at least), asset sales are a great tool for politically expedient deficit cutting.

Category 2) Halt investment. The greater part of the imposed societal costs are long term - so such moves will impact approval to a lesser extent than current spending cuts. And, while this might mean reduced living standards in some sense, people tend not to miss things they've never has (in general, they are more infuriated with service cuts than with the slow pace of progress).

Category 3) Direct payroll incursions. This has got to hurt. The impact can be reduced if early retirement/ voluntary redundancies/ recruitment freezes comprise the bulk of savings. But, just watch the fall in satisfaction levels with government services (policing, ambulance response times...). The only consolation is that for a right of centre party - where most public servants vote left wing - the impact on electoral outcomes will be ameliorated.

Category 4) Welfare benefit cuts. By intuition, since this impacts so great a share of the population (particularly in W Europe), this ought most to leach popular support. Even here there is redress - where there are perceived injustices in the legacy system, and where benefit cuts are implemented by a centre-right political party, there's potential to harden core (and even central) political support.

Empirical evidence that deficit correction can be politically expedient, is certainly reassurance. Let's hope that such studies have a long term influence on government policies, and that future debt is brought to sustainable levels (levels commensurate with falling populations - inevitable in the west). Whilst implementing cuts however, it's certainly beneficial to keep in mind how the political expediency depends very much on the category and context of the individual cut - whatever the economic consequences.

It is amazing how pundits can clothe common sense in words which make it look like original thought!
Of course, governments which are indebted to particular interests will shy away from harming those interests by imposing cuts. The UK is a clear example of this - the banks get away scot-free, Lord Young continues to enjoy his recession-free life and banks arrogantly resume bonus payments while the public (ie electorate's) debt burden goes sky high.
Dishonesty of this kind is pretty well rampant in Western systems now and no politicians has the guts or moral fibre to challenge it. That is the real pity and problem. The solution is -again - a matter of common sense.

Politicians having to make hard decisions and potentially commit political suicide?

Welcome to adulthood politicians! Nice to see the lights coming on and the understanding of leadership sinking in.

If being a leader were easy, then we would not have needed them in the first place. History shows us that a true leader of the people and for the people will make these hard decisions that may have short term pain but long term gain.

Does anyone remember the hard decisions the Founding Fathers of the United States of America had to make? Essentially committing treason first to bring about life, liberty, and the pursuit of happiness for all.

Counterpoint: I do strongly believe that they can both cut spending and reduce taxes... that is what we all have done through the recession.

Ah yes, but you have to differentiate between a RECESSION and a DEPRESSION.

Apart from the name, what is the difference?

For a recession, basically despite whatever the government does, the economy climbs out in a couple of years. What these authors have been analyzing is a series of recessions, only.

Fun, but not relevant to our present situation.

In our present situation, wait for it boys and girls, the present level of unemployment will be the same or higher in TEN years. A totally different kettle of fish. We are stuck in a vicious cycle of low demand, low investment, low demand. Supply? Forget it.

Raising taxes? That will reduce demand, reduce confidence even further. Lower taxes on the other hand will increase demand and increase confidence.

Reducing taxes will also increase investment by reducing the cost of capital just that much, thus increase demand and so on.

Reduce spending? Reduce demand, reduce confidence, and anger the population. That will lead to social trouble, and reduce demand even further.

Its all in the text books.

A quick way out of this mess. Print money (QE!), but SPEND IT ON INFRASTRUCTURE, CAPITAL WORKS, AND EVEN ARMENANTS! Anything to get employment up, demand up, confidence up.

I believe one of the reasons politicians find it so hard to reduce spending is that most of their input comes from special interest groups most of which get a large part of their income from government spending. While the largest part of the electorate is not getting significant income from government those that do will make most of the noise in the press. What is a politician to do when he has several million dollars worth of lobbyists giving advice to him every day.

There is a very good reason why the IMF prefers using stated policy rather than a reduction in the primary deficit as the criterion for fiscal consolidation. A reduction in the primary deficit can occur purely as a result of economic growth rather than any attempt at austerity. If the economy grows quickly, tax revenues naturally increase and reduce government debt without any real effort from legislators, who will of course claim the improvement in the public finances as the sole result of their genius.

So, the study is not really testing whether governments are reelected when they implement austerity, but whether they are reelected when there is economic growth. That the study finds this to be true should be completely unsurprising. This is the fatal flaw of this particular study, and other studies that use the primary deficit as the criterion for austerity.

Buttonwood, in another column in the economist quotes the IMF to say that the Alesina study may not be considering monetary policy. When Governments are implementing austerity plans, it usually leads to lower growth and higher unemployment, but central banks are around to lend a hand with interest rate cuts. The situation is very different now, because central banks cannot lower interest rates any further. It is very likely that governments implementing austerity measures now will get voted out of power.